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Hi I have set up a company/svp in order to start to build up a property portfolio. I was looking to do interest only (as landlords with a company will be able to continue to declare rental income after deducting the mortgage interest only payments) and make over-payments annually upto 10% so that i can pay the properties off. If i do the overpayments will that have any impact on the tax deductable nature of the calculation please ? or will these count like repayment mortgages and not be tax deductible. Any information here would be very useful. Thanks

I own two buy to let properties plus my residential home. All have mortgages secured on them. I withdrew equity from one of the BTLs (Property 1) before the stricter rental cover tests came into force in 2017. I have been able to refinance since then but choice of lenders has been greatly reduced as many won't touch it due to the large size of the loan against the monthly rent. Property 1 has a value of £375k, outstanding mortgage £246k (LTV 66%), and monthly rent £1075. It is my former home and has seen good capital growth as it is in a prime residential area, but clearly it does not yield well! The second BTL property (Property 2) has a value of £320k, outstanding mortgage £170k (LTV 53%), and monthly rent £1200. The two existing BTLs are owned with my wife. We have so far not converted to a limited company as we have avoided the mortgage interest relief changes by making my wife, a basic rate taxpayer, entitled to the income. That is currently the plan for the new acquisitions too. I am looking to expand my portfolio and have a goal of buying another two BTL properties this year, with hopefully more to follow. I have enough cash saved to use for deposits and fees etc. on the two new BTLs. (I may also look at releasing equity from Property 2 to increase my investable funds.) We can assume that the two new BTLs will have significantly higher yields and wont struggle to satisfy lenders' stress tests when looked at in isolation. However, I have identified that the portfolio landlord rules may be a hurdle to my portfolio expansion plans as the low-yielding Property 1 is likely to skew the rental cover tests that lenders will run on my portfolio as a whole once I reach 4 properties. I would be grateful for any thoughts or advice on the following: 1. At what point do I become a portfolio landlord? I don't think my residential home counts towards the 4 properties, but I have heard that when you own three mortgaged BTLs and are in the process of applying for the fourth BTL mortgage, lenders will apply the portfolio landlord tests at that point. Is that right? 2. Is there a standard portfolio rental cover test which lenders are obliged to use? Or do the exact calculations vary by lender? I have seen 145% @ 5.5% interest rate mentioned a lot. Are some lenders more flexible than this? If not, I think Property 1 is going to be a large hurdle to my expansion plans. 3. Even if I could find a flexible lender who would lend on my portfolio including Property 1, will Property 1 always hold me back when I seek to expand my portfolio and refinance? After all, each time I make a new acquisition I will be potentially approaching a new lender each time - each one will have their own view on my portfolio based on their own criteria. I don't want availability of finance to be a constant struggle as I expand. Therefore, should I consider selling Property 1 and putting the equity of £129k-ish to work elsewhere? I'd rather not sell as I believe future capital growth prospects remain strong, but I am also keen to expand in the short term. 4. Would converting the existing BTLs and/or buying the new BTLs within a limited company help with availability of finance? I understand the portfolio stress tests may be more relaxed when it's a limited company borrower. Looking forward to your thoughts. Thanks Matt

I am transferring my existing property to limited company (capitalised at £1) at market price and obtained a mortgage for it. Mortgage states that my equity will be used as deposits for the purchase but solicitor insist that I should have corresponding deposit money which needs to be transferred to solicitors account and once complete this money will be transferred back to my account, otherwise the transaction cannot go ahead. Is my solicitor correct? Also Lender is asking for a gift deed to transfer my equity?